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Elizabeth Warren's Wall Street frenemies

Elizabeth Warren understands Wall Street better than any other presidential candidate. She studied it in her previous career as a Harvard professor, and she has effectively built her own think tank inside the Senate, coming up with genuinely novel ideas for how to improve financial regulation.

What to watch: Warren has already received the grudging respect of many on Wall Street. Her diagnoses of where the financial services industry falls short are generally accurate, and her proposed regulations would probably give a competitive advantage to financial giants with large compliance departments.

Driving the news: Warren blasted the private equity industry this week. She understands that bankruptcy and limited liability can be good for capitalism and society as a whole, but that they can also be abused. When that happens, private equity companies can end up making profits from portfolio companies that go bust. Employees invariably bear the brunt, alongside trade creditors and even consumers with gift cards.

Our thought bubble: Private equity is the polite term for what used to be called leveraged buyouts. Mike Milken gave buyouts a bad name in the 1980s, and Warren is betting that private equity is similarly unloved today. Axios' Dan Primack says that Warren's proposals would kill much of the private equity industry, especially the turnaround sector. He may well be right. The question is whether it would be mourned.

What's next: Warren's academic research changed the way bankruptcy was thought about. Her proposal for a Consumer Financial Protection Bureau became reality, with broad public support. When she says that the unbanked spend more on interest and fees than they do on food, she touches a nerve. It's easy to see potential profits for smart financial services industry executives who embrace her legitimate criticisms and try to get ahead of these issues.

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